Farming and Divorce Solicitors
When it comes to a divorce and finances, most case will centre around typical assets such a the family home, holiday properties, investments, pensions and so on.
How is a farm treated on divorce?
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- Many farms stay in families for generations with multiple family members often having stakes, for example, through a family trust or partnership or a limited company. It’s also common for farming families to transfer property and assets to the next generation to reduce liability for Inheritance Tax. These complex methods of ownership can make divorces in farming families difficult to resolve and this is why specialise legal advice is needed from a family law solicitor.
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- A divorce involving a farm can also be challenging particularly if the family home is located where the day to day running of the farm takes place.
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- The court will look at whether a farm is a matrimonial asset or non-matrimonial asset. The starting point is to look at the nature of the farm and where it came from. A matrimonial asset is more likely to be shared during a divorce whereas a non-matrimonial asset is more likely to be ringfenced unless it is needed to meet ”needs” for example for housing and income.
- However, despite being different the farm will still be an asset that needs to be taken into account and please see further information.
What factors are important on a farming divorce settlement?
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- Value – It is important to know what the value of the farm is and whether the farm is financially healthy. This could include the capital value (to include the land but also livestock and machinery) and also to look at the income.
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- Liquidity – the farm may not be able to be realised and this needs to be factored in.
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- Risk – the farm might be asset rich but income poor. As with any business, there is always an element of risk. The farm might also be subject to complex agricultural ties which are registered on the land or there may be planning restrictions.
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- Third parties – the farm is often run as a partnership with other family members. This can add its own layer of complexity to the divorce. Those family members may live on the farm and will have their own rights. On occasions they may need to intervene in the divorce case as they will have beneficial interests in the farm.
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- Inheritance and trust – ownership and the source of the farm need to be properly considered on divorce. Arguably, if the farm was inherited then it could be described as ‘non matrimonial’ property but each case is dependent on it’s own facts and all the circumstances need to be taken into account.
- Tax – this is always an important considered and need to be taken into account with specialist tax advice on divorce.
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Will the farm be sold?
- If the farm has been inherited through a family over generations, this can carry a significant amount of sentiment to the farm and understandably a farm owner may wish to retain their farm in a divorce and to try to protect it from being taken away from them.
- It is unusual for a divorce court to sell a business, including a farm but in a long marriage case, the starting point is to divide assets equally but care is need because:
- Not all assets are the same
- Some assets are more riskier than others eg. a farm compared to cash at bank and there will be liquidity issues
- The income from the farm may be needed to pay for outgoings eg. to support children, private school fees and so on. This is particularly important if the farm is the main source of the family’s income.
- If the farm has been inherited or the ownership structure needs to be considered (which might provide for a ring fencing argument or discount in value)
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How can I protect my farm?
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- It is usually possible to come to constructive solutions without recourse to the Court. If you are able to enter into negotiations, then the complexity of the farm can be considered, and flexible solutions can be reached.
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- There can be solutions to reach a fair divorce settlement, such as a separation agreement or a financial order by consent, and in an amicable way to best protect your farm.
- A pre or post nuptial agreement is a good way to attempt to protect a farm from a future divorce settlement. The types of family law agreements create the opportunity to discuss what would happen to the family farm in the event of separation and can be very persuasive when coming to a financial settlement. It can also prevent lengthy solicitor negotiations or family court proceedings at a later date. Further information can be seen here.
We are specialists in divorce and financial cases. We are ranked in Tier 1 of The Legal 500 and are leaders in our field. We work closely with our agricultural and planning teams who are specialists in looking at these issues alongside us together tax experts and specialist counsel.
Farming and Divorce Solicitors You Can Trust
Maguire Family Law are expert farming and divorce solicitors. We understand the unique challenges involved in dividing farming assets during divorce. We’ll provide specialist advice to ensure your interests are protected.
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